Health and Personal Social Services: Executive Directors' and Senior Managers' Pay

When the Health and Social Services (HSS) Trusts published their Annual Reports for 1997-98, showing large increases in salaries awarded to some Chief Executives, the Secretary of State for Northern Ireland expressed concern and initiated an investigation by the Department of Health and Social Services into the pay of Executive Directors and Senior Managers in the Health and Personal Social Services (HPSS).

The Department's investigation, conducted at the end of 1998-99, revealed:

• that there were significant variations and anomalies in the pattern of Executive Directors' and Senior Managers' remuneration across Northern Ireland; and
• that in respect of a limit of 2.7 per cent that had been set by the Department for 1998-99 for the increase in the salaries of Executive Directors and Senior Managers, while nine Trusts adhered to the limit, ten Trusts exceeded it. In this latter group, increases of up to 5 per cent and bonuses of up to 9.5 per cent, some of which were consolidated into basic pay, were awarded.

The Department concluded that the current system of pay freedoms of the Trusts is not working effectively and has damaged the public standing of the Health and Personal Social Services. Accordingly, it announced the following measures in February 1999:

• work on the development of a new, fairer pay system, centrally managed and monitored, to be applied to all Executive Directors and Senior Managers in the HPSS, including the Trusts; and
• a further limit of 2.6 per cent increase on the pay of Executive Directors and Senior Managers to be applied for 1999-2000.

In October 1999, the Department wrote to each of the nineteen Trusts regarding future pay increases. In the case of those which had clearly breached the policy for 1998-99, it expressed strong concern and disappointment that Trusts did not adhere to Government policy. The Department told NIAO that it understood that some of the "defaulting" Trusts believed that they were acting properly in either avoiding potential legal challenge or in ensuring that their staff were protected from any reduction in remuneration levels.

In a number of cases, the Department made it clear that the increases cannot be seen as representing value for money for the taxpayer. The Department accordingly advised some Trusts that any variance from the 2.7 per cent should be remedied in 1999-2000.

Some HSS bodies and their appointed auditors were critical about the adequacy of the advice disseminated by the Department on the pay limit. The Department was of the view that its published guidance was clear and unequivocal. However, there seems to have been difficulties in its interpretation.

In sharing the Department's concerns about the awards made and in welcoming the plan to introduce new pay arrangements from April 2000, NIAO recommends that future guidance should be drawn up at an early stage and that it should be clearly understood by, and transparent to, all parties concerned.

NIAO intends to monitor the position closely in respect of 1999-2000 and will report on the matter again, if appropriate.